Back to Basics
Containerisation and the Industrial System: An Insider's View
In this paper I have outlined the Industrial background
of the waterfront and container terminal industry.
I have recounted some case histories to illustrate
the way in which the industrial system operates in
practice. One can only speculate on the effect of this
environment on Australia's international trade and
its economy. Already coastal shipping has fallen victim
to unbearable maritime and stevedoring costs.
It is sometimes said by apologists for the industrial
establishment, and always by the unions, that bad management
is the principal cause of whatever problems exist on
the waterfront. My thesis is that the ability to manage
on the waterfront, in the sense that this implies control,
direction and responsibility, has been all but lost
under the massive weight of union power entrenched
by industrial legislation and the one-sided way that
the legislation is administered.
Prior to the introduction of containerisation, stevedoring
in Australia had gradually become concentrated in the
hands of a few companies, resulting in each port having
only two or three stevedores. By far the largest, with
operations throughout Australia, was Patricks, very
much under the personal control of Reg (later Sir Reginald)
Reggie Reed had a phenomenal rise to success and riches
due in no small way to the very close relationships
which he established with union officials. Many a shipping
line customer of Patricks was happily impressed by
Reggie's uncanny and mysterious influence with the
Waterside Workers Federation (WWF). The WWF has an
absolute monopoly on the handling of general, and most
bulk, waterfront cargo. The union was, in the 1960s
and 1970s, under the firm hand of the brilliant and
articulate Charlie Fitzgibbon. Organisationally, the
WWF is surprisingly democratic, with elections and
rules scrupulously observed. Its Federal officials
are regarded as being politically and economically
sophisticated but their ultimate authority, once acknowledged
by all members, has of recent years become somewhat
eroded. The local (i.e. port) branches behave with
less responsibility, particularly Sydney which is the
scene of vicious infighting between proponents of the
communist and socialist ideologies.
By the late 1960s, only a small number of waterside
workers were employed directly by the stevedoring companies.
The great majority were employed by an offshoot of
the employers' association and allocated on a daily
basis to stevedoring companies as required. In an attempt
to curb the concentration of power in the stevedoring
industry, overall supervision of the waterfront was
vested in the Australian Stevedoring Industry Authority
(ASIA). This government body, amongst other functions,
administered discipline, controlled admission (by registration)
and attempted to maintain standards of performance.
It was resented by both employers and unions, no doubt
because of its enforcement powers and its effectiveness.
As a result of the Kirby inquiry in 1977, the organisation
was disbanded and all waterside workers distributed
to the then existing employers.
One of the arguments supported by both employers and
unions at the Kirby inquiry was that the direct employment
of waterside workers would result in an immediate transference
of loyalty to the new employer, thus reducing the incidence
of strikes. Incredibly, this nonsense was taken quite
seriously. Of course the WWF was anxious to escape
from the constraints and enforcement powers of the
ASIA, which was completely unimpressed by the exercise
of industrial muscle. The employers, who resented its
inhibitions on such incentives as the 'job and finish'
and other sweetheart deals, were equally keen to see
Of the many waterfront union groups, the most difficult
to deal with, by far, were the Tally Clerks, a maverick
component of the Federated Clerks Union (FCU). Traditionally,
Tally Clerks were employed, usually on a casual basis
from a union-operated pool, to check the unloading,
loading, receival and delivery of cargo. Often drawn
from the ranks of former waterside workers, the Shipping
Section of the FCU inherited similar militant and irresponsible
tendencies. Their attitude was conditioned by the knowledge
that both containerisation and technology would inevitably
affect their jobs and reduce employment opportunities.
In the late 1960s, this group found a leader in Joe
Riordan, who had recently taken over as Federal Secretarly
of the FCU. Riordan had successfully campaigned to
remove the former communist incumbents and was regarded
as a political moderate, although he appeared to distance
himself from other executive officers of the union
whose NCC affiliations were not generally acceptable
in Labor Party circles.
The containerisation of sea freight had been pioneered
by the legendary Malcolm MacLean, developed by Matson
Line for its Hawaii/mainland service, and in the 1960s
adopted by Associated Steamships Pty Ltd (ASP) for
its Australian coastal service. The first long-haul
international freight service to become containerised
was the Europe/Australia run initiated by the arrival
in 1969 of the UK-based Overseas Container Line (OCL)
containership, 'Encounter Bay'. Australia's first major
landbased container facilities, with port terminals
in three States, were Seatainer Terminals Ltd---a joint
venture of ASP and OCL.
Briefly, the benefits of containerisation related
to greater efficiency and reduced costs, faster and
larger vessels, reduced delays in port, and greater
security. Given the capital investment that was readily
available, and the commitment of major shipping and
transport interests, why after all this time have these
objectives not been realised in Australia? It is an
unfortunate fact that, despite some minor improvements
in the last few years, the average handling rate of
containers in this country is far less than elsewhere,
even than New Zealand, and the consequent cost per
ton much greater.
Of course, not all of the blame can be ascribed to
the institutionalised industrial environment that characterises
the waterfront. However, the following few examples
perhaps illustrate the principal reason why management
in this industry expects to devote 80 per cent of its
time to labour-related and industrial affairs. In no
other Western country that I know of are there greater
constraints on efficient management than in Australia.
Nowhere else do the unions have a greater capacity
to thwart progress and mindlessly impede constructive
innovation than in this country---all the while protected
by quasi-legal apparatus whose detrimental effect on
the nation's well-being is seemingly inviolate.
The context of these few examples, and the present
state of the industry (once again the subject of government
inquiry, this time having Royal Commission status),
should be seen in the light of the naivete and idealism
of those who first introduced containerisation to this
country in the late 1960s. The vision was simple:
to establish a 24-hour-a-day, factory-type environment.
Containerships would be unloaded and loaded without
delay or interruption. Container handling equipment
would continuously work at maximum design rates. Containerships
would soon be arriving and departing in continuous
stream so that berth occupancy and crane utilisation
would be 100 per cent or nearly so. Naturally it was
expected that this arrangement would have its price.
There was ready agreement to work 5 days on and 3 days
off on rotating shifts, i.e. normally a 35-hour week
at most. Four weeks annual leave was conceded, a benefit
with precedent only in the coal industry. Unlike conventional
stevedoring, the work would be predictable, comfortable
and with high-quality amenities. The income of workers
would be more than 50 per cent higher in container
terminals than elsewhere on the waterfront. All workers
would be permanent employees of the terminal company
and the use of casual pool labour would be unnecessary.
In short, work in the container terminal would be reserved
for a technically superior elite labour force, dedicated
to the objective of constantly improving efficiency
and all the while grateful for the greatly advanced
benefits and conditions provided.
Thus in 1967 a broad agreement was reached with all
unions under the auspices of the ACTU called the Container
Industry Agreement. In return for numerous generous
working conditions and the introduction of new rosters,
the parties agreed to a procedure for resolving disputes
which required negotiation with unions at various levels,
local, State, finally Federal. During these negotiations
it was agreed that normal work would continue.
Well, we all have visions. This one did not take long
to evaporate under the heat of union power and privilege
in the forum presided over by Mr Justice Moore. As
a presidential member of the Conciliation and Arbitration
Commission allocated to the waterfront industry, Mr
Justice Moore took as his appointed task the literal,
constitutional, requirement to '. . .prevent and settle
industrial disputes', making clear that his charter
made no reference to justice, fairness, morality, principle
or economic benefit.
With another ingredient being the need for this highly
capital-intensive industry to be kept moving at almost
any cost, and with decisions often being made by the
local agents of overseas shipping companies (whose
long-term stake in the industry, or even the country,
might be tenuous at best), the outcome might have been
The reaction of the unions to the impending introduction
of containerisation was suspicion and hostility. Their
predictable stance was that no change would be permitted
to occur without generous recompense to their members
and a fair carve up of the spoils between unions. To
achieve this objective, unconstrained industrial pressure
was applied. Notwithstanding that the Container Industry
Agreement bore the signature of the then president,
R.J. Hawke, appeals to the ACTU to have its members
abide by the agreement at least in so far as the avoidance
of disputes procedure was concerned---were without
exception ignored. Thus the original Agreement became
the archetype of all future negotiated agreements and
awards in which the unions readily accepted the benefits
but repudiated their agreed obligations---with complete
impunity within the Australian industrial system. Joe
Riordan, Federal Secretary of the FCU, promised that
the whole investment would be a white elephant and
prove to be uneconomic due to union resistance unless
terms acceptable to his union and its members were
agreed upon. Claiming to be a supporter of the arbitration
system despite the indifference of his followers to
its edicts if dissatisfied, Riordan wielded a lot of
clout. The need to keep the waterfront moving, together
with a desire to keep moderate union leaders in office,
appeared to result in the FCU being accorded preferential
treatment over other unions and being successful in
disputes on wages and conditions, feather-bedding and
restrictive work practices.
Memorandum of Understanding
In 1967 a dispute between shipowners and the FCU was
heard before Mr Justice Moore over the Easter weekend.
The tentative and temporary settlement was recorded
in a poorly worded document and ultimately achieved
notoriety under the title of the Memorandum of Understanding.
Ostensibly an agreement, it was regarded by all as
an unofficial decision by Mr Justice Moore. As a conciliator,
no less than an arbitrator, he was a dominating (at
times domineering) pragmatist, without concern for
anything but a settlement that would be acceptable
to the strongest party and would stick. His 'recommendations'
carried with them the implicit threat, especially to
the weaker party, of worse to befall it now or hereafter
at his hands if his recommendation was not accepted,
regardless of the merits of the issue.
The gist of the 1967 Memorandum was that only those
clerks nominated by the FCU would be employed at container
terminals and that Tally Clerks must be employed wherever
containers are packed or unpacked (except if the entire
contents were for a single consignee). Furthermore,
the employers undertook to provide the FCU with information
about the movement of containers in order to assist
the union to police the agreement.
The implication of this was that by agreement between
the FCU and the shipping companies, as recommended
by Mr Justice Moore, Tally Clerks were to be installed
in places remote from the waterfront and given the
power to control the movement of containers and cargo.
The impact of this on organisations not present at
the hearing before Mr Justice Moore, particularly transport
operators, freight forwarders, wool stores, etc., and
even other unions such as the TWU, can be imagined.
Over the next two years a great deal of manoeuvring
took place. The FCU's Shipping Section (the Tally Clerks)
were busy creating on-the-job disputes and serving
logs claiming coverage on employers who may in future
be likely to pack or unpack containers. In the early
part of 1969 disputes were created in container terminals
and depots in an attempt to further feather-bed the
new container industry, which resulted in Mr Justice
Moore 'strongly recommend[ing] that the 1967 Understanding
be revived'. In this case the Association of Employers
of Waterfront Labour was a party to the hearing and
lost no time in directing its members to comply.
One of the very first industrial issues that I became
involved in occurred at the Seatainer Terminals Ltd
White Bay container terminal in Sydney just prior to
my arrival in 1971.
At the time the relationship between the Tally Clerks
(i.e. the Shipping Section of the FCU) and Seatainers
was more than a little tense. Already the Conciliation
and Arbitration Commission had ruled against the company's
plan to use staff supervisors to man the control tower.
Another case was current in which the clerks were demanding
substantial increases in manning, The clerks had, by
virtue of the success of their almost continuous industrial
action, and decisions in their favour obtained by Joe
Riordan from Mr Justice Moore in the Commission, concluded
that they were in complete control and were not averse
to demonstrating their power.
In February 1971, the Assistant Shift Supervisor came
across two clerks in the control tower with bottles
of beer half consumed. When instructed to report to
the Shift Supervisor they refused. By the time they
were interrogated the evidence had disappeared and
the supervisor was challenged to prove that they had
in fact been drinking on the job (a dismissal offence).
Subsequently beer bottles were discovered and photographed
on the premises. The terminal Manager, on the grounds
that the clerks had refused to report to the Shift
Supervisor as instructed and had obviously been drinking
on duty, thereupon dismissed the two clerks.
Predictably the whole container terminal then ground
to a halt as all of the clerks went on strike, demanding
their colleagues' reinstatement. As was normally the
case, all other employees reported for work and continued
to be paid. Experience had shown that any attempt to
obtain usable stand-down rights as an award variation
through the Commission would be futile, particularly
in the face of implacable opposition from the WWF.
In due course, the matter surfaced at the Conciliation
and Arbitration Commission where it was heard before
Mr Justice Moore. By this time the cost to the company,
and to others with delayed cargo and delayed vessels,
had run into millions of dollars. After hearing
argument in detail, and some three months after the
event, Mr Justice Moore decided that rather than continuing
with arbitration, as requested by all parties, he would
make a recommendation. It is worth quoting verbatim:
'I recommend to the company that these two men be
re-instated. This recommendation does not mean that
I have formed any conclusions on the merits of the
case one way or the other. It does not in any way reflect
on management or on the supervisory staff nor on the
two men concerned. It only means that I consider it
desirable in the interests of everyone that they should
be re-instated now.'
The company, terrified at the prospect of even worse
treatment and greater losses if it chose to ignore
this recommendation, complied. Accordingly the two
clerks were paid the wages that they would have received
had they been at work, instead of at home, for the
three months since their dismissal. Needless to say,
the popular perception of all this was to reinforce
the view that the company was weak and inept, and fair
game for further exploitation.
At about the same time, in 1970, Seatainers were attempting
to introduce a system of planning, control and communication
(the PCC system) in all its container terminals. This
system had been devised by a firm of consultants to
integrate information about the movement and status
of containers, using teleprinters at various locations
within the terminal to transmit details to a central
control office. The basic purpose of the proposed
PCC system was to improve efficiency, but there were
implications as far as the Tally Clerks were concerned.
Initially, the company intended to increase the number
of clerks employed at its Sydney container terminal
from 62 to 82. At this point the PCC system would have
reserve capacity, and the expected increase in terminal
throughput as new trades became containerised could
be easily absorbed without further manning.
Of course the clerks could see no merit in this, and
refused to participate in any training or to use the
new equipment. This impasse was brought before Mr Justice
Moore in July 1970. The hearing proceeded, with various
adjournments, for three months during which time the
system was inoperative. Notwithstanding assurances
and offers by the company on these points, the case
was allowed to drag on without resolution. In October
1970, Riordan suddenly announced that he required the
manning to be increased to 109 clerks as the price
for his unions co-operation. Once again, the hearing
Thereafter, issues involving rosters, hours of work,
etc. were introduced by the union. It became clear
at least to Seatainers that Riordan could delay indefinitely
any changes proposed by management by raising new,
often unrelated, matters when the Commission reconvened.
The status quo continued through 1970 and into 1971
with many adjourned and indecisive hearings. Mr Justice
Moore, although expressing exasperation himself from
time to time, was very careful to be seen to be even-handed.
For example, in March 1971, he was constrained to say:
'...this has been a long process and it has been
going on now for some time. This from my point of view---the industrial relations point of view---means the
situation is probably deteriorating instead of improving,
and although I do not want to rush anyone I think that
these problems that you raise and which the company
raises have to be dealt with reasonable quickness.
I am not suggesting we gallop through the whole thing,
but there cannot be too much delay because the whole
thing will go really sour. Having said that I wonder
where we go from here.'
The answer was, not very far. Finally in May 1971,
nearly a year after the company first appealed to the
Commission to support, and if necessary enforce, its
right to make legitimate changes, a decision was handed
In giving his decision, Mr Justice Moore made some
revealing philosophical observations:
'I have constantly reiterated that my main objective
has been to restore good working relations at the terminal
and I trust that the decisions that I am about to announce
and which are essentially compromises will be accepted
by both the men and the company as a genuine attempt
to achieve a situation which will enable the company
to run its terminal in an economically sensible way
and at the same time will ensure that the interests
of the men are protected and the relationship between
management and men remains good.'
'I have endeavoured as best I can to strike a balance
between the rights and wishes of the company and the
rights and wishes of the men. It may not be a perfect
solution but it is a compromise which I think should
produce a favourable result if it is allowed to work.'
In the main his decision did much to endorse the company's
rights; sadly, however, it did nothing to assist in
implementing the changes required. It has been amply
demonstrated throughout these drawn-out proceedings
that the Conciliation and Arbitration Commission, under
the presidency of Mr Justice Moore, would not enforce
compliance with negotiated agreements and awards, much
less with its own decisions. The Commission's abdication
of its constitutional enforcement powers was a clear
announcement of its impotence to administer labour
contracts fairly and justly as implied by the Award
system---a pyrrhic victory indeed, the hollowness of
which was perceived by all unions and the industry
Management III--With Friends Like These?
For the sake of objectivity, I should recount the
story of my final major involvement with the FCU.
The Glebe Island container terminal had been established
by the Maritime Services Board of NSW in 1973 with
an elementary computer system. A year later, after
considerable criticism and complaint, the whole container
terminal facility and equipment were leased to the
newly-formed company, Glebe Island Terminals Pty Ltd
to be operated as a common-user container terminal.
In the early stages, up to 1976, clerk manning levels
had been progressively increased to deal with additional
business. Thereafter, computerised control systems
were technically improved and the requirement for Tally
Accordingly, attempts were made to eliminate certain
jobs and reduce the number of Tally Clerks employed.
Negotiations and rational argument were, as usual,
of no avail---either directly with the FCU or in the
Commission---so the status quo prevailed.
The company, Glebe Island Terminals, had four equal
shareholders, including Farrell Lines Inc. in New York
(who also owned a large part of another shareholder,
and thus controlled somewhat more than 25 per cent)
and Patrick Operations Pty Ltd. Patricks had a very
long association with Farrell Lines, having had their
stevedoring business for many years. The Governing
Director of Patricks was Sir Reginald Reed, Chairman
of Glebe Island Terminals.
In 1982 the emergence of competition and an economic
downturn in the economy were recognised as a threat
to the company's viability. The importance of saving
costs by reducing the number of Tally Clerks could
no longer be ignored. Thus action was approved by the
Board of Glebe Island Terminals intended to achieve
these economies, but which, entirely predictably, effectively
shut down the terminal.
On this occasion the company had sought and obtained
the co-operation of its shipping line customers and
other users of the terminal. The Board itself considered
that there was no alternative, being a matter of profit
or loss (the company had reported a profit in every
year since its inception). It appeared that the case
for reduction in the number of Tally Clerks was incontestable,
particularly as redundancy/retrenchment arrangements
had already been negotiated on an industry-wide basis.
During this period, while the clerks (but no others)
were on strike, negotiations were held in Melbourne
with the Federal President of the FCU. The departure
of Joe Riordan into Labor Party politics had deprived
the Sydney branch of the FCU's Shipping Section of
its champion and advocate. For the very first time,
it appeared that reason might prevail. Discussions
at the Federal level were constructive, and agreement
was reached with the union for a substantial reduction
(from, I believe, 66 to 35) in the number of clerks.
The Tally Clerks in Sydney, needless to say, refused
to accept this and continued with their strike despite
their own union's recommendation. At the same time
the matter was being heard in the Commission where
the local clerks had brought back to represent them
none other than Joe Riordan himself. In the event (not
before Mr Justice Moore), the Commissioner's decision
went against the clerks, which shattered their faith
in their hitherto champion but did not get them back
Many shipping lines, and particularly the two which
had representatives on the Board of the company, were
accumulating even greater losses. The Shipping Section
of the FCU had made it clear that vessels normally
worked at Glebe Island would not be serviced elsewhere.
However, it was also becoming apparent that the clerks
were losing their resolve, and for the first time in
12 years were facing defeat. Accordingly, the union
booked the Balmain RSL for all members to meet and
be told that they must return to work and accept the
manning reductions required by the company (under threat
of expulsion from the union). There was no doubt that
this formality would signal a most significant breakthrough
for all employers and represent a fundamental change
in the balance of power on the waterfront. Never before,
in the short history of containerisation, had the entire
industry, and employers, maintained the fortitude to
withstand such pressure until victory was finally achieved.
What an achievement! At last, justice and right would
Simultaneously, word came from the headquarters of
Farrell Lines, the major shareholder in Glebe Island
Terminals, that the strike must cease---the cost had
become unbearable for them. The Directors were shocked
at this development since they were convinced that
victory was in sight, a view held by all users of the
terminal and the industry at large. However, Farrell
Lines, with its long-time stevedore Patricks, effectively
controlled the company, so I, as the General Manager,
was directed to have the terminal working within 24
On the next, fateful, day, the Board of Glebe Island
Terminals met as usual in Patricks offices---while
the clerks assembled at Balmain. I reported to the
Directors that I had the union's assurance that the
clerks would return to work after their meeting. It
is true that the local Shipping Section had not always
responded to their own union's directives, but this
time it as common knowledge that they had had enough
and were ready to capitulate.
While the Glebe Island Board was awaiting the good
news from Balmain, the Chairman answered a phone call
from New York. It seems that Farrell Lines required
an immediate end to the dispute and were not prepared
to wait even one minute longer.
Incredibly, after the very briefest discussion, I was
instructed by my Chairman, Sir Reginald Reed, to telephone
the Balmain RSL immediately and inform the FCU representative
that the company would not reduce the number of clerks
employed. They returned to work next day and the strike
was over. The role of the Conciliation and Arbitration
Commission in this sorry episode may be regarded as
peripheral, but nonetheless the end result was clearly
a product of the Australian industrial system.
Postscript. . .
Within two years, the Shipping Section had seceded
from the FCU and been accepted by the WWF, Farrell
Lines had terminated all services and closed down its
operations in Australia, Patricks had become a subsidiary
of Howard Smith Ltd and acquired all of the shares
in Glebe Island Terminals (and had negotiated a considerable
reduction in manning). Sir Reginald Reed had died,
and I had left the country.
Today the industrial process and apparatus continues
virtually unchanged. Joe Riordan, having had an undistinguished
career outside the system that he knows so well, has
returned to become a Deputy President of the Conciliation
and Arbitration Commission....
Sir John Moore, formerly Mr Justice Moore, is now
Chairman of the Stevedoring Industry Review Committee.
Established in 1986, the Committee's charter requires
it to consider all aspects of improving efficiency
and productivity, and gives it power to implement changes
in management and practices. Predictably, the Committee
comprises equal members from the employers and from
Plus ca change....
In Australia, as in many other countries, the waterfront
is the scene of conflict between powerful opposing
forces. The employers and shipowners require speedy
turnaround to service their investment; the workforce,
if given the opportunity to exploit this need, will
combine resolutely to do so. The employers' objectives
are achieved when relations are harmonious and stable;
the unions flourish and their leaders prosper, at least
politically, in turmoil and struggle. Governments from
time to time feel obliged to intervene and typically
do so by creating an independent controlling authority
or a tribunal to limit the excesses of the most powerful
protagonist. Inevitably such initiatives must fail
due to changing political or economic influences. In
my time I have observed the dismantling of the Australian
Stevedoring Industry Authority and the decay into irrelevance
of the Conciliation and Arbitration Commission and
its attendant paraphernalia.
One is forced to ask: Why, in this day and age, do
we require an industrial system at all? Why do we have
legislation that gives privilege and immunity for union
behaviour that is not available to citizens? Why cannot
a freely negotiated agreement between employer and
employee (i.e. a consent Award) have the same legal
status as any other contract between consenting parties?
Perhaps, one day, a government will have the will and
courage to address these issues. Possibly the vision
of those pioneers of containerisation may yet be realised.
Only then will all Australians enjoy the economic benefits
and standard of living that can flow on from an internationally
competitive, efficient and revitalised waterfront industry.
Why HR Nicholls?